What Drives the Development of the Insurance Sector? An Empirical Analysis Based on a Panel of Developed and Developing Countries

By E. Feyen, R. Lester, Roberto Rocha. 2011

211 citations recorded by the source corpus.

The insurance sector can play a critical role in financial and economic development. By reducing uncertainty and the impact of large losses, the sector can encourage new investments, innovation, and competition. As financial intermediaries with long investment horizons, insurance companies can contribute to the provision of long-term instruments to finance corporate investment and housing. There is evidence of a causal relationship between insurance sector development and economic growth. However, there have been few studies examining the factors that drive the development of the insurance industry. This paper contributes to the literature by examining the determinants of insurance premiums (both life and non-life premiums) and total assets for a panel of about 90 countries during the period 2000-08. The results show that life sector premiums are driven by per capita income, population size and density, demographic structures, income distribution, the size of the public pension system, state ownership of insurance companies, the availability of private credit, and religion. The non-life sector is affected by these and other variables. While some of these drivers are structural, the results also show that the development of the insurance sector can be influenced by a number of policy variables.

Subfields: Demography, Economics and Econometrics, Soil Science

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Citations in the corpus

The link between life insurance activities and economic growth: Some new evidence (2013, background): “Feyen et al. (2011) noted that insurance demand generally varies with income, showing that the very rich groups may not need life insurance, because they have surplus/excess assets, whereas the very poor groups do not have the means to buy life insurance products.”